Petrochemical industry worries prompt creativity, innovation

A side from increasingly threatening geopolitical issues, not to mention “the bad men who have nuclear weapons,” Derrick Morgan, senior vice president of American Fuel and Petrochemical Manufacturers (AFPM), said there are two other things that keep him up at night, in terms of impacts on the energy industry. One is recession.

“At some point, this awesome economic cycle will come to an end, and we’ll have a recession of some kind,” said Morgan. “How are we going to weather that? How are we going to bounce back stronger after that?”

Morgan said trade issues are another cause of worry.

LyondellBasell Channelview Site Manager Kim Foley, INEOS Vice President of Manufacturing for North America Cathy Culpepper and AFPM Senior Vice President Derrick Morgan discuss the state of the petrochemical industry in the U.S. South and beyond at the Gulf Coast Industry Forum.

“We’ve got to get those solved, because we only have 5 percent of the world’s population,” he explained, discussing the state of the petrochemical industry in the U.S. South and beyond at the Gulf Coast Industry Forum held recently in Pasadena, Texas. “That means most of our customers are overseas, and we’ve got to be able to trade to them. We need to break down barriers, and we’ve got to be sure that the world is open for trade. And if that’s true, I think the cycle of prosperity continues.”

Perhaps as important as a good night’s sleep is for the industry to avoid becoming complacent during the current upcycle, added Cathy Culpepper, INEOS vice president of manufacturing for North America.

“Many of us remember 2008,” said Culpepper. “We don’t want to relive those days. So if we take the lessons we learned from that time and apply them to the very prosperous cycle we’re in today, I think it gives us even more opportunity.”

Culpepper noted there’s opportunity to be creative and innovative between industry businesses that may seem very disparate.

“I encourage folks to think outside the box. There are some big win-win opportunities out there,” she said.

The renaissance and regulatory news

Co-panelist Kim Foley, Channelview site manager for LyondellBasell, agreed it is exciting to talk about the industry’s current growth climate.

“I was in manufacturing for the first 19 years of my career, and when they shipped me downtown to learn strategic planning, the discussion was that United States manufacturing was going away,” Foley said, recalling how the discussion dampened her enthusiasm. “I remember sitting down with the first consulting groups. They told me all these plants were going to shut down, and they did all these analyses in these groups to prove those theories.

“Yet, here we are. Fast-forward to not too many years later, and it’s just the opposite.” Reiterating that “it’s very exciting” to be part of the manufacturing renaissance, Foley noted executing well as an industry every day is what facilitates it.

“We say that we can have cheap feedstocks, we can have access to good ports,

but if you’re not a good operator, that doesn’t always get you the license to expand,” she observed. “I want to thank everybody on the Houston Ship Channel for being a partner with us in helping our industry look really great globally.”

Sharing regulatory news, Morgan said the Trump administration has recently issued “what could be its biggest deregulatory move in the entire presidency, by adjusting fuel economy standards through 2026.”

The adjustment, Morgan continued, could save the average American about $2,400 on a new vehicle by keeping 2020 fuel economy standards flat, translating to $500 billion in overall societal cost savings.

“It’s a big deal happening right now that not a lot of people are paying attention to,” Morgan added. “But the administration is actively asking people to weigh in with their opinions.”